According to Red Herring, report says Taiwanese contract manufacturer called on to build Apple cell phones. Apple Computer CEO Steve Jobs may actually be able to pull off a splashy iPhone announcement at Macworld by January.

The Mac maker has placed an order for 12 million iPhones to be built by a Taiwanese contract manufacturer, according to an analyst citing reports from Asia. Hon Hai Precision, whose customers include Apple, Cisco, Dell, Nokia, and Sony, has received the order, according to a Taiwan media report cited by UBS Investment Research.

Ã¢â‚¬Å“This data point is in line with our expectations that a cell phone could be discussed in January at Macworld with limited sales by February and broader distribution in spring 2007,Ã¢â‚¬Â UBS analyst Benjamin Reitzes wrote in a research note.

The analyst said the number of cell phones under contract exceeds estimates for 2007 and that those phones would make a Ã¢â‚¬Å“significant and incrementalÃ¢â‚¬Â contribution to earnings.

However, analysts have noted that an iPhone could cannibalize iPod sales. But the move can't be resisted. Music and mobile communication are just two areas experiencing the force of convergence. Yet, Apple is going to have a challenging time playing in an area where mobile devices are heavily subsidized by carrier contracts, and at the same time competing with incumbent players such as Nokia, Motorola and the emerging Windows Mobile device makers such as HTC. That said, healthy competition can only mean one thing though: the benefit will go to consumers.